Clearing down Mortgage

[nhussain03]

Hi all,

I brought a house early part of last year it wasn't the most expensive house out there but I did want to buy something on which I could clear the mortgage on quickly. I had intended to put a 40% deposit down but due to Div tax 25% was the better option and because I did not start looking until I had at least 50% of the property value I built up a lot of funds in my business accounts. Anyway fast forward a year and I pretty much have enough to clear the mortgage, however obviously it is not very tax efficient to do it all in one go.

Is there any advice that you could give to someone in my position, my preference would still be use the money to clear the mortgage. With the looming IR35 I may wind down, would that be a good option?

If that isn't possible what are the best ways to make the "money work for me".

[cojak]

This is after you’ve paid your taxes, right?

[Lance]

You seem to be confusing company money with your money.
Forget the mortgage as that is secondary to your question.
You want to know the most tax efficient method to extract money from the company without breaking the law.

There are thousands of threads covering this topic. Read some.
Most will suggest you ask your accountant. If you don’t have one then get one.

[WTFH]

And after speaking to your accountant, look at the rules on your mortgage.
there will be an early exit fee, but if you got one that was discounted for the first few years, the fees will be higher

[Lance]

And after speaking to your accountant, look at the rules on your mortgage.
there will be an early exit fee, but if you got one that was discounted for the first few years, the fees will be higher

it's often not worth getting rid of mortgage. You can get 1.5% interest (ish) on premium binds so put the extra cash there and only clear the mortgage at the end of a discount period.

[nhussain03]

This is after you’ve paid your taxes, right?

Correct, this is after taxes paid and money to for upcoming taxes for the next year.

And after speaking to your accountant, look at the rules on your mortgage.
there will be an early exit fee, but if you got one that was discounted for the first few years, the fees will be higher

There is early exit charge but there is still some good scope to make over payments penalty free. I would not pay it all right now but next year the penalty will be less than the interest I would otherwise pay.

it's often not worth getting rid of mortgage. You can get 1.5% interest (ish) on premium binds so put the extra cash there and only clear the mortgage at the end of a discount period.

After reading through the threads on the forums, there isn't that may options to take out cash efficiently.
It looks like that is going to be obvious option is going to be further investment of the cash. I suppose if I can make more than the interest that I am paying on the finance then it would be worth it.

[northernladuk]

Do you have any money left after clearing the mortgage for up to 6 months of no income coming in?

[TheDogsNads]

Hi all,

I brought a house early part of last year it wasn't the most expensive house out there but I did want to buy something on which I could clear the mortgage on quickly. I had intended to put a 40% deposit down but due to Div tax 25% was the better option and because I did not start looking until I had at least 50% of the property value I built up a lot of funds in my business accounts. Anyway fast forward a year and I pretty much have enough to clear the mortgage, however obviously it is not very tax efficient to do it all in one go.

Is there any advice that you could give to someone in my position, my preference would still be use the money to clear the mortgage. With the looming IR35 I may wind down, would that be a good option?

If that isn't possible what are the best ways to make the "money work for me".

Investigate an offset mortgage. I have one which is so good, the bank eventually took it off the market! Throw all your spare cash in there to effectively pay down the mortgage then, you have a borrowing facility you can call on at any time without having to ask the bank.

Newer products may not give quite as much leeway. As i said, it was so good the bank withdrew it as I found out when I went to extend the term about 5 years ago!

[nhussain03]

Do you have any money left after clearing the mortgage for up to 6 months of no income coming in?

I have always kept some cash aside for a "rainy day" which sits in a personal account, I could in theory use that to pay some of the mortgage but it not what it has been set aside for.

Investigate an offset mortgage. I have one which is so good, the bank eventually took it off the market! Throw all your spare cash in there to effectively pay down the mortgage then, you have a borrowing facility you can call on at any time without having to ask the bank.

Newer products may not give quite as much leeway. As i said, it was so good the bank withdrew it as I found out when I went to extend the term about 5 years ago!

I have taken a look into that, it may have been possible at some point to use company savings for a personal mortgage but certain does not seem to be wise idea now. HMRC would not see that particularly favourably.

[eek]

I have always kept some cash aside for a "rainy day" which sits in a personal account, I could in theory use that to pay some of the mortgage but it not what it has been set aside for.




I have taken a look into that, it may have been possible at some point to use company savings for a personal mortgage but certain does not seem to be wise idea now. HMRC would not see that particularly favourably.

It never was possible except in 2008 or so when you could justify it due to the slight risk of banks going bankrupt.